The Trump administration’s new tariffs have sent shockwaves around the world. The escalating global trade war has been accompanied by historic falls on world stock markets, and also put the US dollar and commodity prices in the red. The world economy is now on a path that could lead it over the cliff. Behind the trade war lies the crisis of capitalism and the intensification of imperialist power struggles, especially between US and Chinese imperialism.
“The biggest change to world trade in years”, commented the BBC after Donald Trump announced a series of new tariffs on 2 April. These would be imposed, starting with 10 percent “basic tariffs” on all goods imported into the USA from 5 April, and followed by punitive tariffs — which Trump refers to as “reciprocal tariffs” — against 60 countries and territories, one of which is uninhabited, from 9 April.
According to Trump, these tariffs would mean the “liberation of the United States and the beginning of a new golden age”. In reality, the tariffs mean new burdens on the world’s workers and poor, accelerating and deepening the crisis. The immediate impact of Trump’s tariff plan was to throw the world into a perfect storm. On 7 April Larry Fink, the head of the world’s largest fund manager, Blackrock, claimed “we’re probably in a [US] recession right now”.
Cementing the end of neoliberal globalization
At the time of writing on 8 April, it is still unclear whether Trump will fully implement the announced tariffs. But even if parts are paused and the Trump administration’s mafia-style politics of blackmail pays dividends in the form of deals that US imperialism finds favourable, tariffs and other protectionist measures remain ever more potent weapons in the still-escalating imperialist power struggles. The time when the capitalist class believed that it was through globalization, so-called free trade, international agreements and cooperation that the crises and internal contradictions of the system could be mitigated is long gone.
Instead, it is every man for himself. The world market has stopped growing. In recent years, the annual growth of the world market has been lower than the growth of production, tending to create increased overcapacity and overproduction in a range of sectors. In the intensifying competition for power, markets, raw materials and profits, the capitalist classes of the various countries have increasingly had to rely on the protection and support that their own state can provide against rivals. Nationalism and militarism are therefore back in the driving seat, and the world is becoming a more dangerous place.
This is not the first time this has happened in the history of capitalism. When British capitalism began to be challenged by other capitalists in the second half of the 1880s, the British capitalist class, long in favour of free trade, responded with protectionism. Or as Friedrich Engels wrote in On the Question of Free Trade, 1888: "It is to stave off this impending fate [of decline] that protection, scarcely disguised under the veil of ‘fair trade’ and retaliatory tariffs, is now invoked with such fervor by the sons of the very men who, 40 years ago, knew no salvation but in free Trade.” Engels also stressed the need for the workers’ movement to take an independent class position. “The question of free trade or protection moves entirely within the bounds of the present system of capitalist production” he explained, and socialists, “who want to do away with that system”, support neither so-called free trade nor tariffs and protectionism.
When the success of its own capitalist economy can only be won at the expense of others, American capitalism too is forced to go on the offensive, including against “allies”. Trump 2.0, having overestimated his own and US imperialism’s strength, hence his regime’s hubris, has done this in a most extreme and unforgiving way. It is a recipe for escalating trade wars, new crises, disasters and wars.
Impact on the US/China imperialist power struggle
Two imperialist powers in crisis are fighting for world domination. But in recent years, Chinese imperialism has been weakening at a faster rate than American imperialism. However, this trend may be reversed as a result of the hubris of US imperialism, its attacks on allies and the many battles started by Trump 2 0.
The cumulative effect of Trump’s new tariffs, if fully implemented, means that US tariffs will be higher than during the 1930s depression, when world trade shrank by 65 percent and chaos and anarchy reigned in the currency markets.
In total, the new tariffs, which are an additional tax on imported goods, and the resulting price increases are estimated to cost US households $3,800. Elsewhere, the tariffs targeting Cambodia, Bangladesh, Thailand, Lesotho risk crushing these poor and extremely export-dependent countries.
Trump’s tariff plan is aimed at US imperialism’s main rival on the world stage — Chinese imperialism — but also hits hard at allies, such as South Korea, Japan and EU countries, as well as countries in Southeast Asia. “By imposing heavy tariffs on other South East Asian countries including Cambodia, Vietnam and Laos, Trump has ‘slammed the door shut’ on how China rejigged its supply chains to get around the tariffs imposed on Beijing during Trump’s first term. There were five Asian nations in the 10 countries and territories hit with the highest tariffs” (BBC, 3 April).
The additional tariffs — of 34 percent — to be imposed on goods imported from China will bring total tariffs against China to around 60 percent. According to the Economist magazine last November, tariffs at that level would mean a drastic reduction in China’s exports to the US, perhaps by as much as 85 percent. Despite all the trade barriers and tariffs, China exported $439 billion worth of goods to the US in 2024, but now US-China trade is collapsing, similar to what happened to Europe-US trade after US tariffs were raised by 40 percent in 1930 (Smoot-Hawley Act). Between 1930–32, Europe’s exports to the US fell by two-thirds.
The Chinese regime, which cannot afford to appear weak in the face of US imperialism, has responded with 34 percent tariffs on all US imports from 10 April, to which Trump has threatened further tariff increases of 50 percent against China.
The EU and other individual countries have also announced that they will respond to Trump’s tariffs with countermeasures.
It can also not be ruled out that the countermeasures, in addition to tariffs and other charges, also include allowing the value of their own currency to fall in order to keep exports up, if possible, in a currency war and price war, created by the trade war. Competing devaluations were a recurring feature of the trade war that raged in the early 1930s. All this in turn increases the risk of an out-of-control development and a crisis comparable only to the 1930s depression.
Faced with the threat of increased tariffs, which have been constant since day one of Trump 2.0, a number of governments have promised to increase imports from the United States and/or to make investments. Earlier this year, for example, the governments of Japan and South Korea pledged to buy ‘record’ amounts of US gas and oil and invest in US gas projects. However, the tariffs to be imposed on South Korea and Japan are still higher than the 20 percent tariffs that Trump wants to impose on the EU from 9 April. Furthermore, the Trump administration is demanding that Japan and South Korea pay more to remain under the US ‘nuclear umbrella’. If not, the two countries must develop their own nuclear weapons.
US imperialism’s attempts to hold the rest of the world hostage, to put it on rations, cement the geopolitical shifts that have occurred under Trump 2.0. But the Trump administration’s aggressive offensive cannot hide the fact that US imperialism is weakened and is playing into the hands of Chinese imperialism.
Even countries in the West are falling victim to US imperialism’s quest to become the sole dominant world power; to make America great again (MAGA).
Just before the US imposed tariffs on all aluminium and steel imports in March, Peter Navarro, Trump’s trade advisor, said “We are fighting an existential battle for industrial survival and when it comes to steel and aluminium, the US has no allies, only competitors who cheat and dump.”
US economy hit the hardest
Trump’s tariffs against the EU and thus Sweden would reduce Swedish exports to the US, which is Swedish capitalism’s third largest export market, by 10 percent. The tariffs would hit the automotive industry, which accounts for almost a third of exports to the US, particularly hard. EU exports would fall by about the same amount, according to a report by the (Swedish) National Board of Trade.
The same report predicts that the tariffs will in fact hit US capitalism hardest. Imports are expected to fall by 10 percent and exports by 14 percent. This is because the US industries that the tariffs are supposed to protect are particularly dependent on foreign inputs. “US automakers such as Ford and GM still depend heavily on global supply chains. Even for vehicles assembled in America, about 40 percent of the parts, such as engines from Canada and wiring harnesses from Mexico, are imported.
When those parts are taxed, production costs go up. Moody’s estimates that pickups such as the Ford F-150 and Chevy Silverado could cost $2,000 to $3,000 more as a result. Goldman Sachs projects price hikes of up to $15,000, depending on the vehicle. Automakers then face a dilemma: raise prices and risk losing customers or absorb the costs and cut into their margins” (The Conversation 3 April).
According to Trump, the tariffs will bring both jobs and revenue to the US. But “the fact is that not only are we already seeing stock market declines, we are also seeing layoffs in the US manufacturing industry from Cleveland Cliffs, Stellantis and Whirlpool, all presumably due to higher input costs as a result of tariffs and reduced demand in the US”, writes the Centre for Strategic and International Studies (CSIS) in an analysis.
As stated earlier, socialists want to abolish capitalism, and are therefore neither in favour of so-called free trade nor of protectionism, both of which are means of exploitation and plunder. Really fair trade requires the masses to throw off the shackles of imperialism and neo-colonialism. Only the working class can tear down the national barriers and walls that stand in the way of a world at peace and freedom.
The alternative to Trump is not, as the Left Party in Sweden believes, an increasingly militarized Fortress Europe or “national unity”, but the international organization and struggle of the working class and the poor. The task is therefore to build the struggle against nationalism, militarism and imperialism both at home and globally, not to rally behind the capitalist class, including in the form of the EU and European imperialism.
Trump 2.0 personifies an increasingly sick and dangerous capitalist system. We must build the fight against imperialism, war and all the Trumpists of the world. Join International Socialist Alternative.
